BENGALURU (Reuters) – Berger Paints India on Thursday reported a surprise 21% slump in profit, as prolonged monsoons led to a pile-up of unsold stock.
The Indian paint industry has been grappling with a longer-than-usual monsoon that slowed construction activities, and affected demand.
Consolidated net profit fell to 2.01 billion rupees ($24.47 million) for the quarter that ended Dec. 31, missing analysts’ expectations of 2.97 billion rupees.
Revenue from operations climbed 5.6% to 26.94 billion rupees.
Total expenses rose 9.4% to 24.38 billion rupees, after inventory costs soared to 2.1 billion rupees from 3.2 million rupees.
However raw material costs, which accounts for more than half of total expenses, fell more than 8% as crude prices declined.
The benefits of lower raw material prices could not be realised as the company built up inventory in anticipation of festive demand, the company said in its investor presentation.
But lower sales of exterior emulsions due to extended monsoon hit profitability, it added.
The company projected better demand for this quarter, led by a potential improvement in high-margin segments such as exterior wall coatings and waterproofing items.
Last month, top paint-maker Asian Paints missed profit estimates and said extended monsoon affected retailing in the peak festival season.
($1 = 82.1380 Indian rupees)
(Reporting by Nishit Navin; Editing by Dhanya Ann Thoppil)